London house prices: Brexit uncertainty slashes £13k off the average asking price of homes in the capital in one month
Rightmove’s house price index for September reports a 2.2 per cent fall in asking prices compared to August, the first fall seen at this time of year for nearly a decade. Under normal circumstances the market picks up once holiday season is over and children have returned to school.
But Louis Harding, head of London residential sales at Strutt & Parker, says the exceptional political circumstances have overridden traditional seasonal variations. “With the Brexit deadline looming serious sellers have realised that they need to price well to get the deal done.”
There is, however, a ray of hope for those seeking to sell a property in today’s nervous and volatile market.
The time taken for homes to sell has fallen over the past year to an average 69 days, suggesting that lowered prices mean there is still some life in the market.
Rightmove reports that as October 31 approaches, the “deal or no deal” Brexit date, the average price of a home in inner London stands at £739,541, while the average property in outer London is priced at £507,562.
It is the more expensive properties that have seen the biggest asking price falls.
Homes classified as “top of the ladder” — detached houses with four or more bedrooms, and all homes with five or more bedrooms — have seen average asking prices drop by £100,000 in the last month alone, to £1.3 million.
Buying agent Ed Heaton, managing partner of Heaton & Partners, explains: “There is uncertainty over Brexit, the looming threat of a Corbyn government, greater job insecurity - and most bonuses remain a mere shadow of their former selves.”
“Owners seem to be holding back, awaiting either a more certain Brexit outcome or a market recovery, and perhaps both,” says Miles Shipside, Rightmove director and housing market analyst.
“As we approach yet another Brexit deadline there are signs that the increasing gnashing of teeth is causing some to hesitate.”
Shipside believes that those with strong nerves could take advantage of the weakened market.
“Those who are planning to buy or trade up this autumn and can keep their nerve while others hesitate may find they are in a stronger negotiating position to get a favourable deal.”
Heaton says he has witnessed some “extremely smart money piling into the London market over the past few months” in the hope of catching it at its weakest point.
Across the capital, a lucky seven boroughs have seen asking prices increase in the past year. However, only Southwark — with an annual increase of 3.9 per cent — has seen an above-inflation rise, to an average of just under £655,000.
Brexit is, of course, not the only issue faced by London’s property market. Another drag on prices is the cost of moving.
According to new research by comparison website reallymoving, the average cost of a move is almost £25,000 once expenses, including stamp duty, agents’ fees, and legal costs, are factored in.
First-time buyers’ stamp duty bills are lower thanks to the exemption on properties worth less than £300,000. However, they still have to find an average of £5,684, according to the study.
To the future, and Reuben John, of Fine & Country City Living in east London, believes that a delay in Brexit will mean further price falls. If Britain crashes out of Europe without a deal on October 31, the market will experience “a minimum of three to six months of chaos as we work out where we fit in the world”, he says.
“If we leave with a deal, what will that deal be? In some ways leaving with a deal is the greater unknown of the two at the moment,” he adds.